The number of construction proposals in the outskirts far exceeds that seen in the city itself
Significant government intervention has pulled Vancouver’s rental market transactions down by as much as 50%, and overall value by around 27%, according to the Goodman Report’s 2019 Mid-Year Metro Vancouver Rental Apartment Review.
Consequently, dollar volume has fallen by as much as 62%, from $1.383 billion last year to $529 million this year. At the same time, cap rates in the City of Vancouver have gone up 50%.
“In the last two years, the City of Vancouver has gone from being the new rental supply sweetheart … to being absolutely outpaced by the suburban market. As of 2016, the suburbs were so far behind that the Urban Development Institute asked us to serve on a panel in a seminar called ‘Building Rental in the Suburbs’ to demonstrate how rental was possible outside of Vancouver,” the Goodman Report stated.
“Yet fast-forward two and a half years to today, and you’ll see the crushing rate at which developers are applying to build rental in other municipalities.”
The number of new rental construction proposals in the city has fallen by 29% in that time frame. Much of the new volume has manifested on the suburbs, which have seen a sharp 147% increase in proposals.
“This telling difference reveals Vancouver’s failure to ramp up new supply opportunities,” Goodman emphasized. “Also, don’t forget that four long years will go by before all these suites are available (even assuming they’re all actually built). Based on the 7,587 currently in the pipeline, that’s an average of only 1,896 suites per year.”
Much of the blame for the current regulatory regime, which has done more harm than good upon the rental market, could be pinned upon “viscerally reactive, short-sighted politicians with scant business acumen.”
Taken as a whole, these policy-makers’ actions are “a political sell-out of unprecedented proportions as most of Vancouver’s council members have taken the expedient route of acting against citizens’ best interests.”
“It’s quite a sight to witness traditionally left and right politicians banding together against the delivery of new secure housing, albeit for different reasons. Must the status quo be protected at all costs? Has scarcity and an over-regulatory environment helped thus far? More often than not, the permit process takes longer to fulfill than the actual construction.”